The modifications may not be as attractive or valuable to a buyer on the open market.
Sometimes these customisations can be due to individual needs and lifestyle; for example, a lift installed for accessibility or a swimming pool. In most instances, the decision is based on personal preference, for instance, fixtures, fittings, furniture, colour schemes, etc. In the main, upgrades can add to the value of a property or at least make it more desirable than the standard equivalent.
When it comes to selling or valuing these assets, this can be an equally emotional decision. Having invested time, money and our livelihoods into these properties, it is natural to expect these bespoke upgrades and modifications to be reflected in the value of the property. If the owner invests, say Dh500,000 into upgrading a villa, he/she expects an increase in value of at least the same amount. However, many owners are often disappointed to find that this is not always the case.
The reason for this is that the relationship between cost and value is not always proportional, especially as personal taste is extremely subjective; the modifications that we value so highly may not be as attractive or valuable to a buyer on the open market.
For instance, paying for extravagant fittings or expensive colourful wallpaper may offer limited value to a purchaser; in fact, if these customisations are not to the taste of the purchaser, then they may require replacing. Such an example may end up decreasing value, or at least influencing saleability.
There is a reason why developers build standardised dwellings; appealing to a larger target market means a wider pool of potential purchasers willing to pay the desired price. This includes neutral colours and features typically desired by the target market buyer.
In some cases, the desired uplift in value cannot be achieved due to an effect known as the “glass ceiling”, meaning the cut-off point for adding value to a property. For instance, in most cases, a one-bedroom apartment, regardless of the specification and customisation, would not command a higher value than a larger two-bedroom unit within the same building with similar views. At this point, it is no longer economically viable to continue upgrading as the willing buyer would simply buy a larger apartment for the same price and carry out their own upgrades to it.
The same principle applies to location; it is hard to envisage a scenario where any upgraded four-bedroom villa in Al Ghadeer, for example, would have a higher market value than a similar-sized villa on Saadiyat Island.
Furthermore, market dynamics will also influence the impact in value. Various factors, including supply and demand, recent comparable evidence of transactions and changes in legislation, will all play a significant role and can overshadow even the most tasteful improvements.
In conclusion, tasteful and well-planned upgrades should add to the market value of a property. However, it is wise, particularly in a rapidly-changing market, to thoroughly research the potential future impact on value of such modifications and upgrades in order to achieve optimum results.
All rights reserved to the initial publisher of Khaleej Times
Collected and published by Arms &McGregor International Realty® editorial team. Get in touch with us at [email protected].